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These practices are perpetuated by unethical phone service and long-distance providers who switch your service provider either without legal permission or by tricking your organization into agreeing. They may also add excessive, unauthorized charges onto your bill.

No matter how many protections you put into place in your own business, your franchisees may also put you at risk. Taking steps to protect yourself now could save you time and money later.

Understanding Slamming & Cramming

Since the 1980s, unethical communications providers have engaged in underhanded (and now, illegal) practices that can cost business owners thousands of dollars or more.

Slamming is the unauthorized change of a company’s communications provider. Cramming is tacking unauthorized charges onto a company’s phone bill.

The FCC requires companies to either use an independent third party to verbally verify the change or to obtain an authorized signature. A third option is to have you call a designated phone number to authorize the provider change. None of these verification methods is foolproof, however, and providers are more likely to switch now and ask questions later if you challenge the change.

You may have no idea that a change has taken place until you see your bill, or until you notice a distinct degradation of your service quality.

How Your Franchisees May Make You Vulnerable

If you provide phone numbers as a part of your franchise package, your franchisees could potentially increase your risk for being a victim of slamming, cramming or both.

Although your franchisees have no legal standing to make changes of this nature for your business, the companies who perpetuate these costly scams do not have a strong respect for what is and is not legal.

If a franchisee inadvertently provides what may appear to be “legal” permission for the switch, you could be in for a fight. A franchise owner who identifies himself or herself as the business owner — and who rightfully is the owner of their individual franchise — could provide all an unethical provider needs to justify a switch.

Preventing Slamming & Cramming for Your Business

The first step in protecting yourself from slamming and cramming is to determine what the requirements are for switching your service provider. Be sure that you (or someone you designate) closely examines your phone bill as soon as it arrives each month. If you have been the victim of a scam, you only have a limited time to dispute the charges.

If you haven’t already done so, contact your phone service provider immediately and ask them to freeze your account. This, at least theoretically, should prevent anyone but you from being able to change your service provider.

Provide information to your franchisees about the risks of these scams, including how to recognize them and how to avoid them.

Finally, explore the potential of adding verbiage addressing this issue to your franchise agreements. If you hold franchisees liable for incurring unauthorized costs, it may help make them more diligent.

If, despite your best efforts, you get slammed or crammed, the FCC provides remedies. However, depending on the circumstances, you may need legal assistance to sort out the problem.

Franchise & Business Law Group can help you with these and other legal issues related to your business. We are based in Salt Lake City, but we assist business clients throughout Utah. We can assist you with commercial and business law matters, trademarks and franchise law. Contact us today to learn more or to schedule a consultation.

When established franchisors get inquiries from would-be franchisees, the usual course of action is to schedule a phone call. A conversation allows both parties to determine if the potential for a long-term partnership exists.

This initial step of the vetting process is crucial, as no franchisor wants to invest time, energy and resources in a franchisee who isn’t a good fit for the franchise system. But beyond adequate capital to start up the business and keep it afloat until it becomes profitable, what should franchisors look for in franchisees?

Every franchise system has unique considerations, but when vetting franchisees, franchisors should make sure to ask the following questions.

No. 1: Why Are You Interested in this Franchise System?

Franchisees have their choice of several thousand brands and many different industries. Asking why their particular franchise is of interest can help franchisors identify strong candidates. Prospective franchisees who are gung-ho about the brand — rather than just the potential payout — typically make the best partners.

No. 2: How Hard Are You Willing to Work?

For new franchisees, 60-to 70-hour weeks aren’t uncommon. Operating a franchise in the first years takes a great deal of hard work, so franchisors should try to weed out any prospects who aren’t ready, willing and able to invest a significant amount of time and effort toward business success.

No. 3: Are You More of a Leader or Follower?

The ideal franchisee is a bit of both. Franchisors should look for people with the leadership skills to run the business and achieve profitability, but who are also capable of following the proven franchise system. Prospective franchisees who are likely to provide ideas for operational improvements are welcome, but franchisors are wise to avoid partnering with anyone who seems too entrepreneurial.

No. 4: What Are Your Long-Term Goals?

Often, the owners of the most successful franchise locations have been at the helm for years, and their performance is directly related to the expertise they gained over that time. For that reason, franchisors should look to partner with people who want to stick with the franchise for the long haul. If a prospective franchisee says they have a goal of building up the business and selling for a profit, that may be reason enough for a franchisor to take a pass.

With every new franchisee partnership, franchisors take a risk, which is why the vetting process is so important. Thoroughly assessing candidates and turning down any who don’t meet the qualifications is essential.

For expert guidance on franchisee selection and franchise system development, turn to the award-winning professionals at the Franchise & Business Law Group. Our attorneys have decades of experience working with franchisors, and we can help you achieve your business expansion goals.

With the Franchise & Business Law Group on your side, you can count on practical, forward-thinking advice that puts you on the path to success. For more information, or to schedule a professional consultation to discuss franchisor strategies for vetting franchisees, contact our Salt Lake City, Utah, office today.